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					The Link
Investment in Real Estate Investment Trusts (REITs)
Outline
1.   What are REITs
2.   Stock Performances
3.   The Link
What are REITs
   The Code on Real Estate Investment
    Trust (2005)
    ◦ "a collective investment scheme constituted
      as a trust that invests primarily in real estate
      with the aim to provide returns to holders
      derived from the rental income of the real
      estate. Funds obtained by a REIT from the sale
      of maintain, manage and acquire real estate
      within its portfolio."
What are REITs
 Real estate investment companies
 Main assets:
    ◦ Real Estates
      Malls, Hotels, Offices, etc…
    ◦ Mortgages
   3 different types of REITs
    ◦ Equity REITs
    ◦ Mortgage REITs          [not available in HK]
    ◦ Hybrid REITs            [not available in HK]
Equity REITs
 ◦ Invest in real estates only
   Hotel
   Shopping Malls
   Offices, etc…
 ◦ Sources of income
   Rent
   Appreciation in property price
 ◦ Usually listed on stock markets
Equity REITs
 ◦ Special Features (HK)
   Tax: No capital gain tax
   Borrowing is limited to <45% of total asset value
   90% of after-tax income must be paid to investors
    in form of dividend
   Must invest in real estate only
   At least 90% of the total NAV are income
    generating real estates
REITs in Hong Kong
  REITs

  The Link REIT (0823.HK)
  Prosperity REIT (0808.HK)
  GZI REIT (0405.HK)
  Sunlight REIT (0435.HK)
  Regal REIT (1881.HK)
  Champion REIT (2778.HK)
  RREEF CCT REIT (0625.HK)


Securities and Futures Commission:
REITS in only Real Estate Investment with income payment
       Stock price performance
                      IPO Price   Stock price as at   % change
                                   21th April 2010

       Regal            2.68            1.93          - 27.99%
(listed in 3/2007)
     Champion            5.1            3.71          - 37.46%
(listed in 5/2006)
        GZI             3.075           3.48          + 11.64%
(listed in 12/2005)
      Sunlight           2.6            1.91          - 26.54%
(listed in 12/2006)
      The Link          10.3            19.48         + 89.13%
(listed in 11/2005)
     Prosperity         2.16            1.39          - 35.65%
(listed in 12/2005)
       RREEF            5.15            4.35          - 15.53%
(listed in 6/2007)
                   Stock price performance (2007-10)


                                               Regal
                                               Champion
Stock price, HSI




                                               GZI
                                               Sunlight
                                               The Link
                                               Prosperity
                                               RREEF China
                                               HSI




                            Time
            Dividends
              Dividend in   Dividend in   Dividend in   Dividend yield
                 2007          2008          2009          in 2009

  Regal         0.1533        0.1676        0.1700          8.76%

Champion        0.3397        0.3198        0.2617          7.19%

   GZI          0.2258        0.2460        0.2518          7.70%

 Sunlight       0.1350        0.2420        0.2456         12.73%

The Link        0.3463        0.7440        0.8399          4.40%

Prosperity      0.1298        0.1268        0.1098          7.68%

 RREEF          0.1793        0.3645        0.2930          7.09%
The Link (HKG:0823)
   Some Background Information…
    ◦ One of the largest REITs in the world
       NAV = US$3.3Billion
    ◦ Enjoyed highest profit and P/E ratio among all local
      REITs
    ◦ Portfolio of 180 properties
       149 integrated retail and car park facilities
       2 standalone retail facilities
       29 standalone car park facilities
                   Reason 1
                      Low volatility


                                           Regal
                                           Champion
Stock price, HSI




                                           GZI
                                           Sunlight
                                           The Link
                                           Prosperity
                                           RREEF China
                                           HSI




                                    Time
Reasons 2
   Diversified tenants
Reasons 3
   High growth potential in rental income
    ◦ Before the establishment of the Link, malls are rented
      at a rental level far lower than the market value
       Poor quality of the malls
    ◦ The Link focused on renovating the shopping malls
    ◦ Charge a far higher rent after renovations
       Up to 300% increase (market news)
Reasons 3
   Convenient location
Reasons 3
   High growth potential in rental income
    ◦   Rental income:
    ◦   2005/06: $1,237M
    ◦   2006/07: $3,713M
    ◦   2007/08: $3,951M
    ◦   2008/09: $4,242M
    ◦   2009/10: $2,297M   (first 6 months)
The Link
1.       Low volatility
2.       Guaranteed dividend
3.       Highly diversified target tenants
4.       Huge growth potential in rental income

        Risk-adverse investors
     ◦    Inflation hedge
        Retirees
     ◦    Stable stream of dividend payment
The end
Thank You!

				
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